Court stays claim against shipping company, 'pending the outcome of arbitration, if any'

By Karen Kidd | Feb 19, 2019

MorgueFile - Babington

NEW ORLEANS — A third-party defendant in a Malta-based navigation company's $1.1 million lawsuit over an oil spill on the Mississippi River isn't off the hook but claims against it are pending arbitration that may never happen, according to a federal judge's recent order.

In his order and reasons issued Feb. 5, U.S. District Court Judge Eldon E. Fallon denied third-party defendant Ausca Shipping Limited's motion to dismiss claims against it by fellow defendant, New Orleans-area bunkering and tank barge operator Progressive Barge Line Inc. Fallon also stayed claims against Ausca by the plaintiff in the case, Horizon Navigation Ltd., pending outcome of contractually mandated arbitration.

"In other words, Horizon's claims against Progressive and Progressive's claims against Ausca and Horizon remain, while Horizon's claims against Ausca pursuant to Progressive's Rule 14(c) tender are stayed pending the outcome of arbitration, if any," Fallon said in his 15-page order.

Fallon sits on the bench in Louisiana's Eastern District

The case stems from an oil spill into the Mississippi River when Progressive Barge Line allegedly failed to inform crew aboard a Horizon Navigation vessel that the original fuel order had increased from 1,600 metric tons to 1,650 metric tons, according to the background portion of Fallon's order. Horizon Navigation later sued Progressive Barge Line to recover more than $1.1 million in fines, penalties, response costs and/or damages.

Ausca is based in Hong Kong while Progressive Barge Line acted as a new owner. Last month, Utah-based Savage Inland Marine announced it had acquired the assets of Progressive Barge Line, including seven towboats and 12 tank barges in two fleets in the Port of New Orleans. About 60 Progressive employees, including vessel crews and shoreside staff, were expected to join Savage, according to the announcement.

In its motion for dismissal or a stay, Ausca argued Progressive's direct claims were for negligence and doesn't allege that Ausca owes any duties, which means Progressive has failed to state a claim for negligence for which relief may be granted. Ausca also argues that an ongoing claim to seek arbitration turns on whether Ausca may be held directly liable as its agreement with Horizon includes an arbitration clause that calls for disputes to be arbitrated in London under English law.

"Thus, according to Ausca, because Progressive's tender and contribution claims would require Ausca to directly or derivatively defend itself against Horizon, any such claims must be submitted to arbitration," Fallon's order said.

Progressive opposed Ausca's motion, claiming Ausca was trying "nothing more than an attempted end run" around Progressive's rights in the case, Fallon's order said. Progressive noted that arbitration between Horizon and Ausca currently is not pending, doesn't appear it will happen and that a stay pending arbitration would only prevent any recovery from Ausca.

In his order, Fallon said the court is bound by precedent to enforce the arbitration clause "notwithstanding the fact that no arbitration is currently pending."

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